Thursday March 1 2018

Don’t break the bank: Save for your dream home


By Beatrice Nakibuuka

Building a house is one of the biggest life achievements and people often worry about their ability to save enough money to achieve it. But achieving this dream cannot happen in a snap of a finger but it is a rigorous process that needs a lot of time, sacrifice and planning.
Building your dream house means you have to plan your project from beginning to end. This, however, comes with expenses and going over budget according to Moses Kinobe, an architect at Kinobe and Partners. He recommends saving money before one starts building which will give you financial security to cover all your design needs. He adds that in most cases, the home design affects the overall cost of the project.
“You should, therefore, start by doing research on the home design you want, the land costs in different areas where you want to build, choosing a location that offers lower land prices and focus on saving for the overall house building project,” Kinobe says.

Review your daily expenses
Kinobe adds that you have to employ your own skills while at home and do some of the work yourself. It means firing your maid, cutting your rent costs, you would have to move into a cheaper house, walk to and from your work place, forget about the gym and exercise from your home. Only shop when necessary.
Jane Mukasa says she had bought her piece of land way before she ever thought of getting married or having children. She was, however, reluctant to start building although by then she did not have responsibilities that would consume her salary. She now regrets this because after getting married and having two children, her dream of building seems so far away.
Kinobe says, “Review your household budget and daily expenses. Any extra money you can save in the budget should go to your house-building savings account. You may even choose to move to a more affordable house, even if it is smaller or substandard. This is only temporary and will help you put aside the difference you will save between your old housing cost and your cheaper housing costs towards the new house.”

Insurance policy
There are some insurance companies such as UAP, Prudential and Sanlam that allow you to save for an investment plan for about five to 10 years and you are able to acquire annual interest which could be cumulative depending on the insurance company you choose.
According to Mary Ethel Nakakeeto, an agent with Prudential Assurance Uganda, you need to know the target amount for the type of house you want to build and your insurance agent will help you calculate how long you must save depending on how much you earn. However, after you have accumulated enough money for your investment, the insurance company provides no protection or follow up for what you use the money for.
“Our investment plan helps you save for big projects such as building your own house and as a client, you can acquire a 10 per cent annual bonus of the principle you have saved which can also be cumulative depending on how long you intend to save with us,” she says.

Find an extra job
If you only have one source of income, it is time you got an extra way of getting more income. If you will be paid for working extra hours, go for it. Plan to see that you utilise your time well so that you can find another job to get that extra income.
Timothy Kalyesubula, a social worker, says: “Starting a second job with all the income geared towards building a house will take away some of your free time but it is only temporary to help you get the savings you need for the house. Working longer hours will help you get an extra income.”

Save in the bank
Open a savings account specifically for money that will go towards building the house. This will keep the money separate from savings you have for other purposes.
It will allow you to also track your progress toward the amount you need to start your project. Set up an automatic deposit into the account at set intervals, such as once a week or month maybe by Standing Order or physically depositing the money there.

Kalyesubula emphasises that some banks offer special rates if you open a new account and maintain a certain balance. If you already have a good head start on your down payment, this could be a great way to get a bump.
“Also pay attention to any fees you are currently paying at your bank. It is better to research different banks and look for one that offers charge-free accounts which will enable to have your savings and checking accounts freely,” he says.

Bank loan
Most banks provide loans that allow you become a homeowner as long as you are a client who earns some amount of money monthly.
“When you choose to finance the project with a bank loan, it is important to calculate the amount of money you will need to keep this amount in mind to help you track your progress during the down payment,” Kinobe says.

Some banks will offer benefits such as mortgage protection cover for life insurance with flexible monthly payments, insurance covers loan in case of death and permanent disability. You may also be insured against fire, earth quakes with flexible monthly premiums.

Find what you need, before you start
One thing that we have found is that it pays to shop around and find all the materials before you need them. If you do not, you can end up in a situation where you need to buy something to be installed that week, but you can not find it at a reasonable cost right away, you can only order it for delivery in two to three weeks. In order to get it right away to install it you have to pay a premium cost. Plan ahead and buy things in advance to avoid that.

Do some of the work yourself
If you are handy you can sometimes pitch in and do some of the work in the house yourself to save money (if your builder will allow it). For us that means we’ll be installing some of the easy to install fixtures ourselves to save some money on installation costs. Others may feel comfortable doing tile or flooring install. The amount you can save is only limited by your ability and whether your builder will allow you to do some of the work.